China launched its pilot digital yuan on Tuesday, Jan. 4, 2022. The digital currency works through a mobile app, e-CNY, which is available on Android and Apple app stores. The app is still in a development phase and is restricted to select users such as domestic banks as China plans a nationwide rollout.
- China's digital yuan is now available for 1 billion users of the popular mobile payments app, WeChat.
- The launch comes ahead of the Beijing Winter Olympic Games to facilitate transactions without requiring a banking relationship.
- China's ban on crypto mining supports the government's efforts to launch an official digital currency.
The digital yuan is also available on Tencent Holdings Limited's (TCEHY) WeChat, China's popular messaging app that has over 1 billion users. This is a significant shift from China's earlier plans of issuing digital yuan in select regions via a lottery. In June 2021, it announced that it would hand out 40 million renminbi ($6.2 million) via a lottery to citizens in Beijing. Earlier in February 2021, Chengdu, a city in Southwestern China, said it would hand $6 million in digital yuan. Shenzhen and Suzhou ran similar trials.
China's second leading mobile payments app, Alipay by Ant Group, a subsidiary of Alibaba Group Holding Limited (BABA), is also trialing digital yuan payments.
China's central bank, the People's Bank of China (PBOC), has been planning to roll out the digital currency before the Beijing Winter Olympic Games scheduled for February 2022 when "foreign residents temporarily traveling in China can open an e-CNY wallet to meet daily payment needs without opening a domestic bank account."
Earlier, China's crypto ban in September 2021 had cut off the world's largest mining network even while it had started testing its digital yuan. The hashrate recovered speedily, indicating that the total computing power was back on track as the U.S. became the new epicenter for crypto mining.
The PBOC digital currency research institute, which launched the app, will look into the interoperability of the digital currency with fiat and other modes of payments existing today.